We’re in a Bubble – It’s Higher Education

Higher education, generally not known for high creativity and agile strategy, could use a bit of rethinking, based on this excerpt below. Awhile back, I asked a young friend, Scott to write a guest blog post for the Reveln blog entitled Right Sizing Your Education Options. It was based on Scott’s learning of finding a good fit for what what he needed as well as reducing, in 2009, the high cost of his post-secondary education.

Since Scott’s post was written, he’s been successfully employed, now for some years.

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To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.” - Peter Thiel, PayPal co-founder

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Are our higher education sacred cows in need of some irreligious & more clear-eyed, less nostalgic examination? ~ Deb

Entrepreneur Peter Thiel at the 2008 TechCrunch50 conference in San Francisco, Wikimedia Commons

Excerpted from TechCrunch:

Peter Thiel, PayPal co-founder, hedge fund manager and venture capitalist, not only has a special talent for making money. TechCrunch suggests he is also natural contrarian who was also one of the few who saw the 2000 Nasdaq crash coming.

Theil argues that America is under the spell of a bubble of a very different kind – the higher education bubble. Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe.

The excesses of both were always excused by a core national belief that no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.

“Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.” – Peter Thiel

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College is not something that must come after high school. …It’s not something needed in order to grow up. Or meet people. Or be happy.

Like any good bubble, this belief– while rooted in truth– gets pushed to unhealthy levels. Thiel talks about consumption masquerading as investment during the housing bubble…Similarly, the idea that attending Harvard is all about learning? Yeah. No one pays a quarter of a million dollars just to read Chaucer. The implicit promise is that you work hard to get there, and then you are set for life. It can lead to an unhealthy sense of entitlement. “It’s what you’ve been told all your life, and it’s how schools rationalize a quarter of a million dollars in debt,” Thiel says.

…It used to be a given that a college education was always worth the investment– even if you had to take out student loans to get one. But over the last year, as unemployment hovers around double digits, the cost of universities soars and kids graduate and move back home with their parents, the once-heretical question of whether education is worth the exorbitant price has started to be re-examined even by the most hard-core members of American intelligensia.

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…attending Harvard is all about learning? Yeah. No one pays a quarter of a million dollars just to read Chaucer.

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Making matters worse was a 2005 President George W. Bush decree that student loan debt is the one thing you can’t wriggle away from by declaring personal bankruptcy, says Thiel. “It’s actually worse than a bad mortgage,” he says. “You have to get rid of the future you wanted to pay off all the debt from the fancy school that was supposed to give you that future.”

Thiel thinks it’s fundamentally wrong for a society to pin people’s best hope for a better life on something that is by definition exclusionary. “If Harvard were really the best education, if it makes that much of a difference, why not franchise it so more people can attend? Why not create 100 Harvard affiliates?” he says. “It’s something about the scarcity and the status.

…that ripples down to other private colleges and universities. …Geoffrey Canada, one of the stars of the documentary “Waiting for Superman.” He talked about a college he advises that argued they couldn’t possible cut their fees for the simple reason that people would deem them to be less-prestigious.

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Thiel’s solution …convincing some of the most talented kids to stop out of school and try another path…

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Thiel is the first to admit some of this promised security is true. …Today he ranks on Forbes billionaire list and has a huge house in San Francisco with a butler. How much of that was him and how much of that was Stanford? He doesn’t know. No one does.

Ivy window, by Piers Nye Flickr CC

Thiel’s solution …Poke a small but solid hole in this Ivy League bubble by convincing some of the most talented kids to stop out of school and try another path…

Two weeks ago, Thiel quietly invited 45 finalists to San Francisco for interviews. Everyone who was invited attended– no hysterical parents in sight. Thiel and crew have started to winnow the finalists down to the final 20. They’ll be announced in the next few weeks.

…Thiel assumes this is why his relatively modest plan to get 20 kids to stop out of school for a few years is so threatening to a lot of the people who have the biggest megaphones to scream about it. “The people who are the most critical of this program are the ones who are most complacent with where the country is right now,” he says.